TYPES AND FORMS

OF BUSINESS
ORGANIZATION

Presented by: Group

 Forms of business organizations

SOLE
PROPRIETORSHIP PARTNERSHIP CORPORATION COOPERATIVE

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 SOLE
1 PROPRIETORSHIP
TYPES AND FORMS OF BUSINESS ORGANIZATION

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 SOLE PROPRIETORSHIP
◉ One-man business organisation.
◉ Fully owned and managed by one natural
person known as the sole proprietor.
◉ The business and the man are the same, it does
not have a separate legal entity.
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 ADVANTAGES

◉Easy to start up
◉Low cost
◉Tax benefits
◉Freedon & control
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 DISADVANTAGES

◉No protection
◉Unlimited Liability
◉Lack of permanence
◉Reliance on one individual skills and
resources
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 no legal distinction between the owner and the business.

which means: 

1. The owner is 2. He/she is also

entitled to all the responsible for the
profits of the losses, liabilities,
business. and debts the
business will incur.
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2 PARTNERSHIP
TYPES AND FORMS OF BUSINESS ORGANIZATION

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 PARTNERSHIP

◉It is a formal arrangement by two

or more parties to manage and
operate a business and share its
profits.
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TYPES OF
PARTNERSHIP
 GENERAL PARTNERSHIP
◉Two or more individuals agree to
share in all assets, profits and
financial and legal liabilities of a
jointly-owned business structure.

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 LIMITED PARTNERSHIP

◉It consist of a general partner, who

manages the business and has unlimited
personal liability, and a limited partner,
who has limited liability but cannot
participate in management.
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 LIMITED LIABILITY PARTNERSHIP

◉ Is an entity that allows its members to take an

active role in the business of the partnership.
◉ Each partner is not responsible or liable for
another partner's misconduct or negligence.

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3 CORPORATION
TYPES AND FORMS OF BUSINESS ORGANIZATION

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 CORPORATION
◉ It has limited liability so if it fails and has to close
down.
◉ The shareholders only stand to lose their
investment while the employees lose their jobs, but
neither of them will remain liable for the debts that
remain owing to the corporation’s creditors.
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 CORPORATION
◉ A corporation is normally formed as a business
organization to make profits; therefore, it must
deliver returns on the investment by the members.
◉ Members of a corporation can transfer their shares
to other members who then take their position in
the organization.
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4 COOPERATIVE
TYPES AND FORMS OF BUSINESS ORGANIZATION

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 COOPERATIVE
◉ The members who form a cooperative are the ones who
are responsible for the day-to-day operation of the
organization, and all the members have the same share
of control meaning that all decisions affecting the
cooperative are made together by all the members.

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CORPORATE GIVERNANCE

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 CORPORATE GOVERNANCE

◉Corporate governance is the

system by which companies are
directed and controlled.

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WHO GOVERNS CORPORATIONS?

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 CORPORATE GOVERNANCE IS THE
RESPONSIBILITY OF THE BOARD OF DIRECTORS

◉ It is the board of directors of each company

that is legally responsible for the governance of
the company.
◉ The shareholders‘ role in corporate governance
is to appoint the directors and to satisfy
themselves that an appropriate governance
structure is in place.
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 KEY RESPONSIBILITIES OR
THE BOARD OF DIRECTORS
◉ Setting the companies objectives and aim
◉ Determining the strategy to achieve those aims and
objectives
◉ Providing the leadership to put them into effect
◉ Supervising the management of the business
◉ Reporting to shareholders on their stewardship of
the business
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 ESSENTIAL ELEMENTS OF “BEST PRACTICE”
CORPORATE GOVERNANCE

◉ The role of CEO and Chairman in public

companies should be separated
◉ Boards should have at least three non-executive
directors, two of whom should have no financial or
personal ties to executives
◉ Each board should have an audit committee
composed of non-executive directors
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GOOD GOVERNANCE PRACTICE:
◉Transparency
◉Accountability
◉Stewardship
◉Integrity
◉Leadership
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 RISE OF MULTINATIONAL AND
TRANSNATIONAL CORPORATIONS

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MULTINATIONAL
CORPORATIONS

It owns or controls
production of goods or
services in at least one
country other than its
home country.
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TRANSNATIONAL CORPORATIONS

A business that operates

substantial facilities and
does business in more
than one country.
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 ADVANTAGES:
◉Provide work opportunity
◉Generation of government revenue
◉Infrastructure development
◉Increase of employment rate
◉Stable income
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 DISADVANTAGES:
◉ Environmental damage
◉ Poorer working conditions
◉ Cheap labor
◉ Little reinvestment in local area
◉ Profits going to companies overseas rather
than locals
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 Generally
Accepted
Accounting
Principles

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GAAP
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 Generally Accepted Accounting Principles

A common set of accepted accounting

principles, standards, and procedures that
companies and their accountants must
follow when they compile their financial
statements.

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 Definition:

Refers to a common set of

accepted accounting principles,
standards, and procedures that
companies and their accountants
must follow when they compile
their financial statements.
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GOING CONCERN
accounting principle
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This accounting principle assumes that a

company will continue to exist long enough to
carry out its objectives and commitments and
will not liquidate or be forced out of business in
the foreseeable future.

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If the company's financial situation is such

that the accountant believes the company
will not be able to continue on, the
accountant is required to disclose this
assessment.
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SOCIAL
ENTERPRISE
 SOCIAL ENTERPRISE
◉It is an organization that applies
commercial strategies to maximize
improvement in financial, social and
environmental well being.
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TYPES OF SOCIAL
ENTERPRISE
“
 CREDIT UNION
◉Finance co-operative that helps
people save and borrow money.
They also provide access to
community finance initiatives.
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 NON-GOVERNMENTAL ORGANIZATION
WITH COMMERCIAL ARMS

◉A non-profit organization that not

rely on grants and donations but
instead earns income through
selling goods and services.
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 SOCIAL FIRM
◉A business set up to create
employment for those most
severely disadvantages in the
labour market.
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 COOPERATIVE
◉A association of people united to meet
common through jointly owned
enterprises. Cooperative are organized by
and for their members, who come together
to provide a shared service from which
they all benefit.
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 FAIRTRADE
◉A organized social movement that
aims to help producers in developing
countries achieve better trading
conditions and promote sustainability.

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 MICROFINANCE

◉A form of financial service for

entrepreneurs and small businesses
that lack access to banking and
related services.
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MICROFINANCE
:
Two main mechanism for the delivery of
financial services to such clients are:
1. Relation-based banking for individual
entrepreneurs and small businesses
2. Group based models, where several
entrepreneurs come together to apply for
loans and other services as a group.
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